The Port Authority of Kansas City, Missouri, will issue up to $1.49 billion of conduit bonds for the redevelopment of Country Club Plaza, an open-air shopping district that covers 15 blocks in south central Kansas City, after some concessions to local taxing bodies.
It's another example of the use of bonds to structure a tax incentive agreement, as opposed to as a capital raising tool.
The deal, approved by Port KC's board of commissioners at its Aug. 24 meeting, comes with decades of property tax breaks for Dallas, Texas-based developer Gillon Property Group.
The conduit bond structure is a vehicle for Port KC, which despite its name is largely an economic development agency, to offer property tax breaks on the project, the Kansas City Star reported.
The bond series "would be issued to/purchased by Developer or affiliated entities with respect to the real and personal property improvements,"a ccording to a
Instead of property taxes, the developer would make fixed payments in lieu of taxes.
The base PILOT schedule provides for more than $234.5 million of fixed PILOTs over 30 years, with the starting number based on existing tax collections and scheduled increases over time, according to the staff report.
Similar arrangements have been common in recent incentive deals
The redevelopment plan spans 19 blocks and got the greenlight despite a letter objecting to parts of it from Kansas City Public Schools, according
The plaza, more than 100 years old, is one of the first master-planned outdoor suburban shopping centers, known for "
But it is currently pockmarked with "significant vacancies, aging buildings, unmarketable spaces and failing private and public infrastructure," said Amelia McIntyre, Historic Kansas City board member, adding that a presentation to the Port KC board estimated the district has lost 50% of its appraised value since 2020.
Under the incentive agreement, local taxing jurisdictions will receive payments in lieu of taxes calculated based on current assessed values, McIntyre said by email. There will be 2% annual increases, with 5% increases in year 20 and 25, under the agreement's schedule.
While the schedule sets a floor for PILOTs, it also gives Gillon Property Group certainty around taxes for decades to come, she said.
"Each new project within the area will be the subject of a subsequent specific bond authorization for that project," McIntyre said. "That provides an opportunity for further public engagement and oversight."
The city council passed
The developer's plans include apartment development, according to the staff report.
In a March letter to Mayor Quinton Lucas, the coalition criticized the master plan development as "too broad," voiced concerns about setting a negative precedent and requested height limitations on building sites, called the MPD's parking plan "inadequate," and asked that city planning staff preserve "character contributing buildings."
"We are disappointed by the (council's) approval of the Country Club Plaza Master Planned Development without additional safeguards to ensure compatible development within the five redevelopment sites outlined in the plan," Historic Kansas City said in a statement following city council approval of the MPD.
A handful of neighborhood residents voiced concerns, as well.
"I am horrified at the whole idea of the tall ugly buildings in the proposal," said
"The plaza is not possible to preserve in its original highest and best use or as a permanently historic status," said
The 30-year tax incentive agreement calls for total payments of $281.1 million to taxing bodies including the public schools, per
Kansas City Public Schools Superintendent Jennifer Collier released a statement following the Port KC commissioners' approval of the plan, saying this deal was better than the one that had taken shape in November.
"Without the rallying cry of our parents and our union in December, a deal could have moved forward that kept some Plaza properties off the tax rolls for nearly 40 years," she said, according to the Star.
The city council still has to vote on tax increment financing for infrastructure improvements at the site.
Gillon Property Group did not respond to a request for comment by press time.
